NFT's and the illusion of value.
Are NFT's really the new way of making money?
NFT's you hear about them in the news, on Youtube videos, read about them in the papers sometimes. People saying that they are the future and some saying that they are nothing but a scam. Game companies such as Ubisoft and Square Enix have revealed their own NFT's to much derisiveness amongst their fanbase. But what are NFT's? Are they really the future or is it all just an elaborate scheme?
NFT's or Non-fungible tokens are basically a link on the internet to a certain image. However, what most people don't realize is what this actually means. You do not own the image. You just "own" a link that goes to the image. Unlike stocks, or bonds or any other investment there is no proprietary value in owning an NFT. It's all speculative.
A problem with the way the NFT is designed is that an NFT can easily be "lost" just by having the server associated to that NFT be taken down or gotten rid of. Then the link that you have will no longer point to that "NFT" but the space where the NFT was. This means that the "item" you just spend thousands of dollars on is in fact completely worthless.
It should also be noted that NFT's can be created easily and anonymously which means that scams known as "rugpulls" where the creator of the NFT immediately stops working on anything in regards to it and takes all the money that has been earned from the "investment" then disappears like a thief into the night are extremely common with very little legal recourse left available to the investors.
Now to get down to the brass tacks though. How does an NFT actually earn a person money? The value of an NFT only becomes realized if someone else buys it from you unlike stocks and bonds which can provide a return on investment due to the companies success the NFT doesn't pay you a dividend for owning it. All you can do is list the price for an NFT and then hope it sells. The value assigned to any given NFT is not necessarily the true value that you can get from it and that's what a lot of people fail to realize.
But, what about all those articles talking about how people have been able to become rich from NFT's? There have been several sitaution where people have sold NFT's for millions after all. One has even been sold by Christies a well reputed auctionhouse. This actually leads into the *actual* reason NFT's have value.
NFT's create an artificial scarcity or a fear of missing out. The entire economy is based on desperation rather then an actual set of goals for the money that has been given. In most cases the people who create NFT's will have a list of things that the money they get from the NFT's is supposed to do but, have no intention of actually using the money gained towards those goals. Instead it sells people the dream of being rich and financially secure by being "the first" to invest as means of stoking fear in people who really need money. In reality NFT's are basically a game of "musical chairs" however, instead of the winner being the last one with the chair the ones winning are the ones able to get out of the game before the music stops. In the end the people who lose are the ones with the "high valued" NFTs but, lack anyone willing to buy it from them.
When it comes down to it the situation with NFT's shares some parallels to the "Dot com" bubble of the early days of the internet. They are the "new cutting edge tech" that no one really understands but, everyone wants. And just like the Dotcom bubble the NFT bubble is just about to burst. Companies are trying to find a way to convince people of the value of the item but, people are beginning to understand that there is actually no intrinsic value for NFT's. What they are selling you is an illusion of grandeur and the only ones who are really successful are the ones selling you it or the ones who were able to get out before the bubble burst.
About the author
I am an avid RPG/Strategy game player who watches crypto. Currently playing Genshin Impact, Tower of Fantasy and Fate Grand/Order. I mostly play Indie games rather then the triple A major publishers.